Gonsalves: Tallying tax rage, reason

As much as we all love to complain about paying taxes, how many of us really know where and how tax money is spent?

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By Sean Gonsalves

capecodtimes.com

By Sean Gonsalves

Posted Apr. 13, 2014 at 2:00 AM

By Sean Gonsalves

Posted Apr. 13, 2014 at 2:00 AM

» Social News

As much as we all love to complain about paying taxes, how many of us really know where and how tax money is spent?

For a little perspective (as my mother always said was important), the two nonpartisan organizations I like to refer to every year during tax filing season — the deadline for which is Tuesday — are the Massachusetts-based National Priorities Project and the Massachusetts Budget and Policy Center (MassBudget).

Analysts at the NPP, which was recently nominated for a Nobel Peace Prize for three decades of work in analyzing federal spending, have come up with a number of handy tools such as the personalized tax receipt calculator. It allows online users to punch in the amount they paid in federal income taxes and find out how each one of those dollars was spent.

The NPP website (www.nationalpriorities.org) also makes it easy to find out how much the average taxpayer paid the federal government, as well as the average amount paid in each state.

According to the NPP, the average federal income tax bill in 2013 was $11,715, while the average in Massachusetts was $15,552.

One of the more interesting NPP online tools is a graphic that takes the proverbial tax dollar and shows how each cent was spent. Using federal budget numbers, NPP informs us that 27 cents of each federal tax dollar (not including Medicare and Social Security taxes) went to the military.

Health care took another 22.7 cents per tax dollar; 13.9 cents went to pay interest on the federal debt; and almost a dime (9.8 cents) was spent on unemployment and labor costs (including welfare benefits and job training programs). Only a nickel of our tax dollar went to food and agriculture expenditures (which include things like food stamps), with another nickel spent on veterans' benefits.

And for all the complaints about wasted money on education, only 2 cents of every federal tax dollar went to education-related expenses.

The smallest fraction of our federal tax dollar — a penny for each — went to international affairs (including foreign aid), transportation (infrastructure for our planes, trains and automobiles) and science (most of which went to NASA).

When it comes to state taxes, MassBudget (www.massbudget.org) is an excellent nonpartisan source on where our state tax dollars go.

On its website, a visitor can use the "budget browser," an interactive graphic that not only shows the state's funding history, but also allows users to see net state costs, which are state budget expenditures, minus the tax dollars we get from the federal government.

It turns out the biggest chunk of our state tax dollars was spent on health care and education, $8.3 billion and $7.1 billion in the current fiscal year, respectively, according to MassBudget. Aid to towns and cities got relative chump change, receiving just over $1 billion dollars. But the tiniest portion of the state budget went to environmental and recreational programs (about $101 million).

So does our commonwealth deserve the "Taxachusetts" label?

"Compared to other states, Massachusetts is pretty much in the middle of the pack. In the 1970s, we were a relatively high tax state. But the facts have changed fundamentally since," MassBudget president Noah Berger told me on Friday, as I fretted over my family's taxes with the filing deadline clock ticking down.

In the 1970s, he said, the state had an income tax rate higher than the national average. Today, in Massachusetts, we pay an average of 10.3 percent of our income on state taxes. The national average is 10.9 percent.

As for business taxes, Berger said, they are "particularly low in Massachusetts." In fact, according to a MassBudget report released last month, Massachusetts had the 10th lowest business and local tax burden in the nation, as a percentage of private-sector gross state product.

And, when you look at the percentage of state revenues funded by business taxes, it's 45 percent for our "business-friendly" neighbors to our north in New Hampshire. In Massachusetts, business taxes account for 38.6 percent of state revenues.

Since 1998, Berger said, lawmakers have "cut state (income) taxes by over $3 billion dollars, which has had a long-term effect in forcing cuts in early education, higher education and local aid."

When I asked him about political debates over tax dollars for safety net programs, he said, "other than health care, our safety net is a relatively small part of the budget."

If Berger has a bias, it's for asking the right question. While it may be inevitable, we fuss over what to cut and what to increase, he said a better starting point is to ask: "What makes a good community? Safe neighborhoods, good transportation, good schools, clean air, and clean water. And those are things we pay for with our tax dollars."

Feel better about your tax dollars at work? Me either. But at least the NPP and MassBudget help us to more accurately calculate where to focus our tax rage — or reason.

Sean Gonsalves can be reached at sgonsalves@capecodonline.com. Follow Sean Gonsalves on Twitter @SeanGonCCT.